Harry Smorenberg

Monday, June 10, 2013

Abolishing silos!

Unity in
Europe has unfortunately become a scarce commodity. The financial crisis, the gap
between North and South, and differences between East and West are standing in
the way of a united Europe. Today’s world is dominated by short-term thinking,
and focusing on our own backyards. 'Power House Europe’ is now the sick man of
the world.

What is the
best way forward? The usual economic drivers of finance, ICT and telecom have all
been hit hard. There are, however, some signs of revitalization in traditional manufacturing
industry, although primarily in the form of creativity, flexibility and a purely
international focus. Europe is also promoting knowledge-intensive developments and
structural R&D, mainly through smart deployment of young technology talents
in multinational teams. But Europe is also ageing rapidly. Migrants from
Eastern Europe, India and China will soon be our new intelligence workers. EU politicians,
however, remain largely stuck in their ways, making it very difficult for new
entrants. Many member states, for example, do not allow double nationality, while
camera surveillance at national borders is common.

What we
need is to take a mental and maybe even physical leap out of our silos. To open
up and create a new Europe, with new forms of creative partnership. Information
technology is creating new opportunities for us to live and work together, with
3D printers creating instant production 'at the source’. Unique forms of
collaboration will break open the traditional bastions in science and industry.

We are
currently going through a period of social and economic transformation. And slowly
but surely bidding farewell to the established order. From now on, metropolitan
hubs, not countries, will decide on the direction of the economy. And groups of
individuals, not institutions, will steer developments and determine the ‘new
frontiers'.

It is now time
to abolish the silos and establish new relationships and new values. That is
how I see the transformation currently facing us in Europe. And it is up to Europe
to retake control of its future by accelerating this transformation, even as its
population ages.

Monday, August 20, 2012

The next step in Financial Literacy

Fortunately
Financial Literacy is becoming ever more central. People often think that it’s only
an issue for developing countries with a primitive payment infrastructure and a
general lack of knowledge on how to handle money. Yet attention is also being increasingly
drawn to the situation of consumers in more prosperous nations. It would seem
that Financial Literacy is a major concern for these more affluent countries
too. Driven by the ongoing financial crisis, more and more people are being forced
to take active control of their personal finances. The years of 'pampering' by
governments, employers and other institutions are well and truly over. As a
result, the public are being increasingly exposed to risk. Consumers need to
focus on budgeting, planning and book keeping. And take more control of their
personal financial affairs, which requires enhanced knowledge and insight in
the short, medium and longer term. Many, however, are too "caught up in
their daily financial reality" to be able to effectively plan ahead.

"Financial Literacy" should begin with (primary)
school education, under the subject of "personal economy." That knowledge
will act as a potential stimulus to greater discipline in finance, budgeting and
financial planning later on. Unfortunately though, I still see too much 'rumour
around the issue." Many organisations and governments launch purely promotional
schemes, such as "Money Week" and brief courses for schools, covering
only savings and payments (often sponsored by financial institutions). This
might increase young peoples’ knowledge levels to some extent. But structural
"repair" doesn’t come from well-meaning PR. That’s way too optional!

The market requires a much more intensive
intervention. The current crisis could be the perfect trigger for a far more
structured approach to Financial Literacy. Naturally, with a sustained focus on
providing a suitable curriculum during the entire educational process. But also
with the aim of developing universal, standardised reporting from all of the
'financial players' active in the market. Banks and insurance companies often
provide position information (budget info) from their own, individual systems
and package these as unique propositions (USPs) in order to bind customers to
their brand. You only have to look at the confusing selection of budget
planning programs from banks, pension statements, investment reports etc that are
available today.

A central aggregation of this information and a
standardised reporting format from all of the Financial Services providers involved,
is essential for everyone. After all, this consumer data is "non-competitive".
The (commercial) decisions are made​​, the only requirement is that these
institutions deliver the correct information in the right format, as part of a
collective "planning & budget control" program. This information
could become real-time input and might be offered as an additional service
(tab) on the various web banking programs or via a direct governmental channel.
This would create standardisation and clear, uniform reporting on key financial
information for all. An end in other words, to the plethora of different reports
from banks, pension funds, mutual funds, insurers, employers, pension fund
administrators and payroll administrations etc. Standardised reports would offer
direct insight into both the consumer’s current and future financial state. Eventually
planning tools could also be incorporated. This way it becomes an immediate and
permanent benchmark for providers and consumers, in the context of a balanced duty
of care. After all, every individual can and must be able to account for their
true financial position at all times. Customers and financial institutions know
what’s possible, both financially and technically ... I therefore urge the
Ministries of Finance to take the appropriate initiative on this. Look to countries
such as Singapore and Canada. Think about efficiency too, the 'win-win' for the
processing of financial data (e.g. for the tax authorities) and for the financial
sector (through the elimination of countless administrative silos and duplication
of reports).

harry@smorenberg.nl

Harry Smorenberg
(harry@smorenberg.nl) is a strategic advisor for the Financial Sector and
Chairman of www.WorldPensionSummit.com.

Monday, June 18, 2012

Apart from trade union rigidity and politicians'
inability to take decisions, we ourselves are the biggest barriers to longer
working lives, argues Harry Smorenberg.

We are all getting older and
staying in good health for longer. But even though carrying on working for
longer would seem a logical next step, we've stayed where we are for decades,
with no change in the official retirement age. So many vested interests in so
many countries see the age of 65 as sacred and an acquired right that is not up
for negotiation. Indeed, one thing that helped François Hollande win the recent
French presidential election was his irresponsible promise to reintroduce a
retirement age of 60, after it only recently rose to 62.

In most Western countries, people stop work at
between 60 and 62, while the 'workability index' for most European countries is
75. According to the OECD, a retirement age of 70 would currently be realistic,
while working for longer has also been shown to result in people living longer
and remaining in relatively better health. In other words, society is letting
eight productive years go to waste.

Apart from trade union
rigidity and politicians' inability to take decisions, we ourselves are the
biggest barriers to longer working lives. Employers are doing too little to
anticipate longer life expectancies in their workforce, with salary structures
still based on rising salaries. Opportunities for retraining and updating
skills so as to make more flexible use of older employees are being used too
little and too late. Similarly, working environments are not being adapted to
accommodate older people, while pension, tax and insurance products are not yet
equipped for longer working lives. We need to rid ourselves of the perception
that 'old is expensive'.

But employees, too, are doing
too little to anticipate change. Few people are taking responsibility for
planning their personal financial future, whereas doing this properly is a way
of anticipating the need to continue working into the fourth quarter of your
life. The challenge now is to devise a series of cohesive measures to massage
society into making better – and obviously responsible – use of those eight
years of extra productivity. I can already hear politicians claiming a special
status for people in physically demanding jobs. There, too, anticipation – and
at a younger age – is vital. Although there will, of course, always be some
groups of people deserving special care, the fact remains that we need to
accept that working until you reach an average age of 70 should become the
norm.

The question now is what
employers should be doing to anticipate society's need for change. What is the
government actually doing? How flexible are trade unions being in helping to
devise solutions? Who is educating citizens – particularly young people – to be
more aware of the need for financial planning? The results of a recent
'stakeholder' survey disappointed me. People obviously see what is happening,
but there are absolutely no signs of any cohesive policies or combined efforts
to create the right conditions. There is not even any basic research into what
kind of action employers and employees could and would be willing to take.

I would suggest it's now high
time to get that done. The various stakeholders seem trapped in a web of
agreements, with the change needed in the retirement age simply being swapped
for another issue in the political game. No one dares take that vital first step,
with everyone looking at someone else to avoid having to step outside his
agreed circle of manoeuvre. Some people are happily looking at France and the
plans to reverse the increase in the retirement age, with 'growth' as the new
magic word. But who's going to invest and come up with the money at this stage
of the crisis? The missing eight years of extra productivity all too easily get
forgotten when policy for responsibly lengthening working lives is being
devised.

I sense there's little point
in waiting for action from politicians. Perhaps we should talk about 'making
existing pension plans more flexible' rather than 'increasing the retirement
age'. Insurance companies, pension funds and social security systems will need
to anticipate people wanting to work longer. That means coming up with new
products to allow delayed retirement on conditions that are satisfactory to all
parties. In other words, finding a way of rewarding people who contribute to
society for longer.

Perhaps those accepting hybrid
retirement will be able to persuade governments, employers, unions and others
that many people will be keen and able to remain in the workforce – providing
the conditions are right and efforts are made to accommodate the different
parties' wishes. There are also, of course, substantial numbers of older people
whose provisions for retirement are inadequate and for whom continuing to work
– possibly on a part-time basis – will simply be a necessity.

Harry Smorenberg is an independent strategist in the financial services
industry and chairman of the WorldPensionSummit.

Tuesday, June 12, 2012

Hybrid Retirement

We are all getting older and staying in good health
for longer. But even though carrying on working for longer would seem a logical
next step, we’ve stayed where we are for decades, with no change in the official
retirement age. So many vested interests in so many countries see the age of 65
as sacred and an acquired right that is not up for negotiation. Indeed, one
thing that helped François Hollande win the recent French presidential election
was his irresponsible promise to reintroduce a retirement age of 60, after it
only recently rose to 62! In most Western countries people stop work at between
60 and 62, while the 'workability index' for most European countries is 75. According
to the OECD a retirement age of 70 would currently be realistic, while working for
longer has also been shown to result in people living longer and remaining in relatively
better health. In other words, society is letting eight productive years go to
waste!

Apart from trade union rigidity and politicians’ endless
inability to take decisions, we ourselves are the biggest barrier to longer
working lives. Employers are doing too little to anticipate longer life
expectancies in their workforce, with salary structures still based on rising
salaries. Opportunities for retraining and updating skills so as to make more
flexible use of older employees are being used too little and too late.
Similarly, working environments are not being adapted to accommodate older people,
while pension, tax and insurance products are not yet equipped for longer
working lives. We need to rid ourselves of the perception that "old is expensive".
But employees, too, are doing too little to anticipate change. Few people are taking
responsibility for planning their personal financial future, whereas doing this
properly is a way of anticipating the need to continue working into the fourth
quarter of your life.

The challenge now is to devise a series of cohesive
measures to massage society into making better – and obviously responsible – use
of those eight years of extra productivity. I can already hear politicians claiming
a special status for people in physically demanding jobs. There, too,
anticipation – and at a younger age – is vital. Although there will of course always
be some groups of people deserving special care, the fact remains that we need
to accept that working until you reach an average age of 70 should become the
norm.

The question now is what should employers be doing to anticipate
society’s need for change? What is the government actually doing? How flexible are
trade unions being in helping to devise solutions? Who is educating citizens – particularly
young people – to be more aware of the need for financial planning? The results
of a recent 'stakeholder' survey disappointed me. People obviously see what is
happening, but there are absolutely no signs of any cohesive policies or combined
efforts to create the right conditions. There is not even any basic research
into what kind of action employers and employees could and would be willing to
take. I would suggest it’s now high time to get that done.

The various stakeholders seem trapped in a web of
agreements, with the change needed in the retirement age simply being swapped
for another issue in the political game. No-one dares take that vital first
step, with everyone looking at someone else to avoid having to step outside their
agreed circle of maneuver. Some people are happily looking at France and the
plans to reverse the increase in the retirement age, with “growth” as the new
magic word. But who’s going to invest and come up with the money at this stage
of the crisis? The missing eight years of extra productivity all too easily get
forgotten when policy for responsibly lengthening working lives is being
devised.

I sense there’s little point in waiting for action
from politicians. Perhaps we should talk about “making existing pension plans
more flexible” rather than “increasing the retirement age”. Insurance
companies, pension funds and social security systems will need to anticipate
people wanting to work longer. That means coming up with new products to allow
delayed retirement on conditions that are satisfactory to all parties. In other
words, finding a way of rewarding people who contribute to society for longer. Perhaps
those accepting hybrid retirement will be able to persuade governments,
employers, unions and others that many people will be keen and able to remain in the workforce, providing the conditions are
right and efforts are made to accommodate the different parties’ wishes. There
are also of course substantial numbers of older people whose provisions for
retirement are inadequate and for whom continuing to work, possibly on a
part-time basis, will simply be a necessity.